Novozymes reports strong Q2, driven by organic sales growth and nutrition
11 Aug 2017 --- Novozymes has announced its results for the first half of 2017, the company reported a good first half with 3 percent organic revenue growth which was better than expected. Food & Beverages sales grew by 8 percent organically and by 10 percent compared with H1 last year. In Q2 year on year, organic growth stood at 10 percent and 12 percent.
Growth in Food & Beverage segments came across most categories. Nutrition, starch and beverages contributed the most in the first half. Baking performed very well in the second quarter, with strong EMEA performance more than offsetting the negative impact from the announced price reductions in the North American fresh keeping market.
Organic sales growth is expected to be driven primarily by new products launched in the grain-processing industry in 2016 and 2017 (organic: +8 percent 1H year on year, +10 percent Q2 year on year). Baking is still expected to be impacted by price reductions in the North American fresh keeping market, while sales are expected to perform well in other markets. In general, most of the industries within Food & Beverages are doing well after the first half. Novozymes are encouraged by the strong first-half performance and are optimistic about the year, while still acknowledging that it may be difficult to maintain the high growth level for the rest of the year.
Nutrition sales continued to perform solidly into Q2, mainly in the developed markets, driven by increased demand for lactose reduction in dairy and a recovery in enzymes for infant nutrition. Starch contributed to growth, driven by China and North America, although growth in the second quarter was more modest than the high rate experienced in the first quarter. Lastly, sales for beverages in the first half increased over last year, with sales for distilling and juice and wine as the main contributors. Brewing was on par with last year after a soft second quarter.
Andrew Fordyce, Executive Vice President, Food & Beverages at Novozymes told FoodIngredientsFirst: “For Food & Beverages, our aspiration is to deliver solutions that help our customers improve the quality and sustainability of their food and beverage products. I’m pleased to see our efforts focusing on growth platforms paying off in 2017 in many markets.”
“Europe, the Middle East and Africa contributed most in the first half with very strong Q2 growth in both baking and nutrition.”
“In baking, we’re gaining share as well as penetrating opportunities in emerging markets within the region. The EMEA baking growth we’ve seen has been strong enough to offset the negative impact from the announced price reductions in the North America baking business,” says Fordyce.
“Food and nutrition in EMEA also performed well, with our categories in infant formula and low-lactose dairy continuing to deliver growth. A good part of the growth comes thanks to a faster roll-out of Saphera, our new lactose reduction technology.”
“Brewing was another strong growth contributor in the EMEA region. Specifically, we are seeing that in Africa, use of local raw materials, like sorghum, continue to gather strength and that is driving higher enzyme consumption,” he explains.
Peder Holk Nielsen, President & CEO said: “Overall, the first half was good and better than expected. We had growth in the large segments and delivered 3 percent organic sales growth with a strong EBIT margin, excluding one-offs. We made important advances in our innovation pipeline within grain milling, vegetable oil and household care opening up new market segments. We should see growth pick up in the second half of the year, but also acknowledge the risk of agriculture-related markets changing swiftly. Consequently, we maintain our full-year expectation for organic growth, while DKK expectations have been adjusted to reflect weaker currencies.”
By Elizabeth Green
